Accounting Theories and Current Issues

Running head: ACCOUNTING THEORIES AND CURRENT ISSUES
Accounting Theories and Current Issues
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ACCOUNTING THEORIES AND CURRENT ISSUES

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ACCOUNTING THEORIES AND CURRENT ISSUES
Table of Contents
Introduction......................................................................................................................................2
Agency theory analysis in accordance with the selected journal review:........................................2
Implications of the Agency theory:.................................................................................................6
Conclusion:......................................................................................................................................8
References and Bibliography:........................................................................................................10

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ACCOUNTING THEORIES AND CURRENT ISSUES
Introduction
In recent years, there has been considerable growth in accounting policies associated with
development and modification of accounting theories. Implementation of accounting policies and
theories is dependent upon nature of firms and criteria of business. The report is prepared by
analyzing and reviewing agency theory in relation to problems and management implications. In
this particular study, the implication of family firm performance, governance in relation to
agency theory and stewardship theory has been explained by selecting a journal article. The
journal article that has been selected for the purpose of explanation of agency theory along with
its implications is “Viewing family firm behavior and governance through the lens of agency
theory” by Kristen Madison, Franz. W. Kellermanns, Daniel T Holt and Annette L. Ranft
(Madison et al. 2016). This particular journal article depicts that family firm is capable of
creating agency government environment that are specific to such firms. Moreover, traditionally
theorized agent behaviors are created in family firms.
Agency theory analysis in accordance with the selected journal review:
Agency theory helps in the explanation of relationship between the two parties that is
agent manager and principal agent. Chosen journal article addresses the relationship between
agent manager and principal from the governance and behavioral perspectives. Description of
relationship between agent and principal is delegation of work to managers from principal. It is
suggested by agency theory that opportunistic self-interested behavior will be chosen by
managers rather than behavior that are aimed at maximizing the interest of principal (Baumeister
2016). As such, behavior of managers is monitored by governance mechanisms. This intends to